November 20th, 2009 by Reed Allmand 
When we think of Middle Class America we think of stability, nice jobs, good neighbors and stellar careers; but middle class America is in crisis. Many are facing foreclosure and are filing bankruptcy despite their degrees, high salaries and symbols of stability. In this three part series we will explore how and why middle class Americans are getting hit worse by the recession than any other demographic in this country.
Part I – Swelling The Ranks Of Bankruptcy
Nearly 1.1 million Americans have filed bankruptcy in 2009. At least 58 percent of bankruptcy filers have some college education and many of those filers are homeowners facing foreclosure. What was once two markers of stability in America, have now become indicators of future bankruptcy in many cases.
Case Study:
Staci Schubert’s career has taken her from New York to California, from graphic designer to website designer to sales executive. Most recently, she launched a business as a designer of handbags and accessories…After earning $275,000 annually, Schubert used most of her savings to start her business in 2003. The earliest days of the recession in 2007 slowed sales, and she fell behind on business and personal bills. Credit card debt reached $65,000. She tried to find a full-time job without much luck, because the job market was saturated. Temporary freelance design work couldn’t cover her bills. So in January 2008, she filed for Chapter 7 bankruptcy, becoming one of nearly 1.1 million consumer filers that year.
Schubert’s temporary jobs were most likely not enough to cover her bills because of her high debt load. Luckily Schubert does not owe student loans; but she does have a high cost (like most Americans) associated with maintaining her middle-class lifestyle. Rising housing costs, mounting debt and reliance on automobiles for transportation has all conspired to make it more costly and hence more risky to exist as a middle-class American. If this debtor needed bankruptcy relief how many other debtors, who have student loans and much lower salaries need to seek bankruptcy relief? Probably a lot more.
A study conducted by two professors from Harvard Law School and Ohio University, found that personal bankruptcy has now become a largely middle-class phenomenon. Most of those bankruptcy filers have a college education and own a home. The study says that college education and home-ownership can no longer be depended on to protect Americans from financially hard times as was the case in years past.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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